This weekly round-up analytically summarizes the key stories related to the Customs Excise and Service Tax AppellateTribunal (CESTAT) reported at Taxscan from July 21, 2025 to July 26, 2025.
Relief for Hindustan Zinc: CESTAT Rules Liquidated Damages and Penalties for Contract Breach Not Taxable as Service M/s. Hindustan Zinc Ltd. vsCommr. of CGST & Central Excise
CITATION : 2025 TAXSCAN (CESTAT) 810
The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that liquidated damages and penalties collected by Hindustan Zinc Limited for breach of contract are not taxable as services under Section 66E(e) of the Finance Act, 1994. The revenue counsel argued that by accepting these amounts, the appellant had effectively agreed to tolerate non-performance by the contractors. They argued that the recoveries were directly linked to the contractors’ failure to meet contractual obligations and therefore attracted service tax under the declared services provision.
CESTAT Sets Aside Ex Parte Rejection of Compounding Plea, Directs Fresh Hearing Post Duty Adjudication Dipakkumar DharamsinbhaiKakadiya vs Chief Commissioner of Customs
CITATION : 2025 TAXSCAN (CESTAT) 805
The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, has quashed the ex parte rejection of a compounding application filed under Section 137(3) of the Customs Act, 1962. The Tribunal noted that the appellant had made detailed disclosures and explicitly undertaken to pay the dues and compounding fee as determined by the authority. The order rejecting their application was silent on what constituted an alleged failure to make a full and true disclosure, another ground used to deny relief.
CESTAT Quashes Service Tax Demands on Vocational Training Services, Rules Activities Exempt and Barred by Limitation M/s. M.M. Group vs Commissionerof C.G.S.T. and Central Excise
CITATION : 2025 TAXSCAN (CESTAT) 807
The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has set aside service tax demands totalling around Rs. 52 lakhs, noting that the company’s skill development courses were exempt under government notifications and that the tax authorities’ claims were time-barred. The tribunal observed that the appellant’s activities qualified for exemption under Notification 25/2012-ST, which covers training partners approved by the National Skill Development Corporation (NSDC) or Sector Skill Councils (SSCs).
Provisions of IPC not directly applicable to Customs Act: CESTAT Drops Penalty imposed u/s 112(a) of Customs Act in absence of intention to evade tax M/s. Meticulous Forwarders vsCommissioner of customs
CITATION : 2025 TAXSCAN (CESTAT) 813
In a recent case, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) held that provisions of the IPC are not directly applicable to the Customs Act and dropped the penalty imposed under section 112(a) of Customs Act, 1961 in the absence of intention to evade tax. Authorized Representative Shri Sanjay Kakkar appearing for revenue has reiterated the findings from the impugned order. He stated that mens rea was not an essential condition for the imposition of penalty under Section 112(a) of the Customs Act, 1962 and hence the omissions and commissions of the appellants which are in violation of the Custom House Agents Licencing Regulation 2004 and the Customs Act, had correctly been penalized under the Act. He hence prayed that the appeals may be rejected.
Finalized Customs Assessments Cannot Be Reopened for Refund Claims: CESTAT M/s Diamond Mink Blankets Ltd vsThe Commissioner of Customs
CITATION : 2025 TAXSCAN (CESTAT) 811
The Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi, held that refund claims under customs law are non-maintainable where the original assessment has attained finality and has not been challenged through the appellate process.
The tribunal clarified that refund claims are not a substitute for an appeal or review of an assessment order. Since the appellant had not disputed the assessment through statutory appeal, the duty was correctly collected as per the final assessment.
No Service Tax on Export Cargo Handling, Unaccompanied Baggage, and Abandoned Cargo: CESTAT M/s. Joint Working Group vs TheCommissioner of Service Tax
CITATION : 2025 TAXSCAN (CESTAT) 812
The Bangalore Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) recently allowed two appeals and held that no service tax can be levied on terminal charges for export cargo, unaccompanied baggage and abandoned cargo under the category of ‘Cargo Handling Service’, as per the definition under Section 65(23) of the Finance Act, 1994.
Services rendered by FASPL to Foreign Companies classifiable under BSS, Tax Not leviable as it is Export of Service: CESTAT M/s. Fifth Avenue Sourcing Pvt.Ltd vs Commissioner of GST & Central Excise
CITATION : 2025 TAXSCAN (CESTAT) 814
In a recent case, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that services rendered by Fifth Avenue Sourcing Pvt. Ltd. (FASPL) to foreign companies are classifiable under Business Support Service (BSS) and tax is not leviable as it amounts to export of service. The matter initiated by the said Show Cause Notice dated 15.02.2008, has been decided by the Tribunal in their favour and the Civil Appeal filed against the said order of the Tribunal was also withdrawn by the Department vide Order dated 18.12.2020 passed by the Supreme Court due to the litigation policy. Therefore, the impugned orders for the subsequent period are not sustainable in law.
Work Involving Unloading and Marking for SAIL Treated as Cargo Handling: CESTAT Limits Demand to Normal Period, Sets Aside Penalties M/s. A.S. Transport vs TheCommissioner of Customs
CITATION : 2025 TAXSCAN (CESTAT) 818
The Bangalore Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) held that the unloading, hand shunting, painting, and marking work was carried out for Steel Authority of India Ltd. (SAIL) fell within the scope of “cargo handling service” under Section 65(23) of the Finance Act, 1994.
However, it also observed that the appellant had carried out the work for SAIL under a bona fide belief that the services were not taxable. There was no evidence on record to show any intention to evade tax, and therefore, the charge of suppression was not sustainable.
Relief for SAIL: CESTAT Holds By-Products Not Liable Under Rule 6 of CCR, Accepts Proportionate Reversal M/s. Steel Authority of IndiaLtd. vs Commissioner of CGST & CX
CITATION : 2025 TAXSCAN (CESTAT) 817
The Kolkata Bench of Customs,Excise and Service Tax Appeal ( CESTAT ) granted relief to Steel Authority of India Ltd (SAIL ) by holding that by-products like Ammonium Sulphate, Coal Tar, Burnt Dolomite, and Molten Slag were not liable for reversal under Rule 6 of the Cenvat Credit Rules (CCR),2004. Referring to the Allahabad High Court ruling in Hello Minerals Water Pvt. Ltd., the tribunal noted that reversal of Modvat credit amounted to non-availment of credit. Several courts and tribunals had followed this view. Considering the heavy demands raised on manufacturers, the government brought a retrospective amendment in 2010 allowing proportionate credit reversal with interest.
CESTAT dismisses Mittal Corp’s appeal despite CIRP Proceedings, upholds Excise Duty and Penalty for Clandestine Removal of Goods M/s Mittal Corp. Limited vsPrincipal Commissioner
CITATION : 2025 TAXSCAN (CESTAT) 815
The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has dismissed the appeal filed by Mittal Corp Limited, upholding the confirmation of Central Excise duty amounting to ₹1,56,65,763, interest, and equal penalty under Section 11AC of the Central Excise Act. The Tribunal concluded that the department had furnished sufficient evidence of clandestine removal of goods, and the appeal could not be quashed merely due to pending Corporate CIRP proceedings.
Denial of CENVAT Credit for Non-Manufacture Activity: CESTAT Sets Aside Order as Duty Was Paid on All Goods Sai Swaroop Enterprises Pvt Ltdvs Commissioner of Central Excise
CITATION : 2025 TAXSCAN (CESTAT) 816
The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT) set aside the denial of CENVAT credit to the assessee observing that duty had been paid on all goods, including those not deemed manufactured under Section 2(f)(ii) of the Central Excise Act, 1944. Relying on decisions including Asian Colour Coated Ispat Ltd, Creative Enterprises, and A One Laminators Pvt Ltd, the bench held that once duty was paid whether or not legally required credit could not be denied. It stated that if the assessee had paid more duty than the credit availed, the credit stood effectively reversed.
CESTAT Allows Refund of Amounts Paid Under Mistake, Even Beyond One-Year Limitation Period M/s U.P. Purva Sainik Kalyan Nigam Ltd vs Commissioner of Customs & CGST,Meerut
CITATION : 2025 TAXSCAN (CESTAT) 821
The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that service tax amounts paid under a mistaken belief are refundable even if claimed beyond the one-year limitation period under Section 11B of the Central Excise Act. The bench led by Judicial Member P.K. Choudhary observed that the excess amount was paid by mistake and not as tax liability, and such deposits are not governed by the limitation under Section 11B of the Central Excise Act. The tribunal explained that Section 11B only applies to tax refunds and not to mistaken or voluntary deposits.
CESTAT Lacks Jurisdiction in Gold Smuggling Case Involving Passenger Baggage Deep Rastogi vs Commissioner ofCustoms
CITATION : 2025 TAXSCAN (CESTAT) 819
The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that it does not have jurisdiction to entertain appeals in cases involving passenger baggage under the proviso to Section 129A of the Customs Act, 1962. The revenue counsel argued that the appeals were not maintainable before the CESTAT under the proviso to Section 129A of the Customs Act, 1962, because the case arose from passenger baggage proceedings. The provision specifically excludes appeals to the Tribunal in matters relating to baggage.
Cement Acted Only as Binder, Not Primary Base: CESTAT rules Sand Lime Bricks Cannot Be Classified as Cement Bricks M/s. Renaatus Procon (P) Ltd. vsCommissioner of GST & Central Excise
CITATION : 2025 TAXSCAN (CESTAT) 820
The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that bricks manufactured using sand and lime with cement acting only as a binder cannot be classified as “cement bricks” and are rightly classified as “sand lime bricks” (SLB), making them eligible for exemption under Notification No. 1/2011-CE. The tribunal held that the goods were correctly classified as sand lime bricks under sub-heading 6810 11 90 and that the denial of exemption under Notification No. 1/2011-CE was unjustified. The impugned orders were set aside, and the appeals were allowed with consequential relief. The appeal was allowed in favor of the appellant.
Cash Vans Provided with Drivers fall under ‘Supply of Tangible Goods Service’, not Deemed Sale/Transportation: CESTAT Shree Security vs C.S.T.
CITATION : 2025 TAXSCAN (CESTAT) 823 The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that providing cash vans with drivers to banks falls under the category of “Supply of Tangible Goods Service” and not mere transportation or deemed sale. The revenue counsel argued that the appellant did not transfer control or possession of the vans but only provided a service. The vehicles were operated by drivers employed by the appellant, who bore all maintenance, fuel, insurance, and labor costs.
S. 35C(1A) of Central Excise Act Limits Adjournments to Three: CESTAT dismisses Appeal for Non-Prosecution M/s Alcons Infratech vsCommissioner of Central Excise & Service Tax
CITATION : 2025 TAXSCAN (CESTAT) 824
M/s Alcons Infratech vs Commissioner of Central Excise & Service TaxThe Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that an appeal cannot be adjourned more than three times under Section 35C(1A) of the Central Excise Act and persistent non-appearance by the appellant justifies dismissal of the appeal for non-prosecution. The tribunal explained that the tribunal cannot allow proceedings to be delayed indefinitely and cited the Supreme Court’s strong disapproval of repeated adjournments in the case of Ishwar Lal Mali Rathod.
Relief for BPL Ltd: CESTAT Rules Payment Received from JVA as Pure Reimbursement for Business Transfer Delay, Not Manpower Supply M/s. BPL Limited vs TheCommissioner of Service Tax
CITATION : 2025 TAXSCAN (CESTAT) 826
The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the payments received by BPL Ltd from its joint venture partner were pure reimbursements for salaries and rent during a business transfer delay and were not liable to service tax under the category of manpower supply. The tribunal observed that BPL was not engaged in manpower supply services and that genuine reimbursements are not taxable, following the Supreme Court’s ruling in Intercontinental Consultants. The tribunal further observed that the transactions were reflected in BPL’s audited accounts and there was no suppression or intent to evade tax, making the extended limitation period inapplicable.
Rejection of SAD Refund for Missing Period in CA Certificate: CESTAT Sets Aside Order, Remands Matter to AA for Verification M/s.N.R. Colours Ltd. vs TheCommissioner of Customs
CITATION : 2025 TAXSCAN (CESTAT) 829
The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) set aside the rejection of a SAD refund claim, which was earlier denied due to a Chartered Accountant (CA)’s certificate missing the specified period of verification, and remanded the matter to the Adjudicating Authority (AA) for verification. A single member bench of P.Dinesha (Judicial Member) observed that the refund was not rejected due to doubts over the CA’s certificate but because it was incomplete as the period for which the books were verified was left blank.
Trading Not Exempted Service Before 2011: CESTAT Quashes CENVAT Credit Demand and Penalty M/s Frigo Glass India Pvt. Ltdvs Commissioner of Central Excise
CITATION : 2025 TAXSCAN (CESTAT) 827
The Chandigarh Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) held that trading was not treated as an exempted service before 01.04.2011 under Rule 2(e) of the CENVAT Credit Rules,2004 and quashed the CENVAT credit demand and penalty imposed on the assessee. He further stated that the demand was based on interpretation of law and figures from publicly available documents like balance sheets. Since the show cause notice was audit-based and the Department failed to prove suppression or fraud, he contended that the extended period was wrongly invoked and the penalty was not justified. He cited several cases in support of this claim.
Relief for TTK Prestige: CESTAT Allows CENVAT Credit on ISD Invoices for Business Related Services M/s. TTK Prestige Ltd. vs TheCommissioner of GST & Central Excise
CITATION : 2025 TAXSCAN (CESTAT) 828
The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) allowed CENVAT credit to TTK Prestige Ltd on service tax paid through ISD invoices for various business-related services. In that order, the appellate tribunal had held that the main reason for denying credit was that the services were availed through ISD invoices issued by the corporate office. The Department had argued that these services were not consumed at the manufacturing unit and had no nexus with manufacturing activities. However, the bench had clarified that once the corporate office had obtained input service distributor registration, the distribution of credit through ISD invoices was in line with the law.
Free Material Supplied by NTPC for Maintenance Services Cannot Be Included in Gross Value for Service Tax Abatement: CESTAT M/s Utility Powertech Ltd vsCommissioner of Central Tax
CITATION : 2025 TAXSCAN (CESTAT) 830
The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that free material supplied by NTPC (National Thermal Power Corporation) for maintenance services cannot be included in the gross value for calculating service tax abatement. The tribunal explained that while the classification under MMRS was correct, the inclusion of free material value for abatement was legally incorrect, and the penalty under Section 78 could not be imposed in the absence of willful suppression. The appeal was partly allowed, setting aside the demand related to the inclusion of free material value and the penalty, while upholding the correct service classification under MMRS.
Crude Shea Butter with High FFA Not Edible Grade: CESTAT Denies Customs Duty Exemption under Notification M/s Foods, Fats &Fretilisers Ltd. vs Commissioner of Customs
CITATION : 2025 TAXSCAN (CESTAT) 831
The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that crude shea butter with high free fatty acid content is not of edible grade and is not eligible for customs duty exemption under Notification No. 21/2002. The tribunal explained that Notification No. 21/2002 provides exemption only for crude edible grade products, and the intention of the legislature was clear in requiring the goods to be of edible grade at the time of import. The tribunal held that the shea butter imported in crude form with high FFA content did not qualify as edible grade and was therefore not eligible for the exemption. The appellant’s appeal was dismissed, and the demand for customs duty was upheld.
CESTAT Quashes Customs Duty Demand on Re-Imported Rejected Diesel Generator Sets Citing Lack of Suppression Sterling Generators Pvt Limited(EOU) vs Commissioner CGST & Central Excise
CITATION : 2025 TAXSCAN (CESTAT) 832
The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that customs duty demands on re-imported rejected DG sets are unsustainable when the extended period is wrongly invoked and facts were disclosed in returns. They submitted that the re-imported DG sets were re-engineered and supplied as per customer specifications, falling under raw material usage, which is exempt under Serial No. 7 of the notification without a time limit. They further argued that all details were declared in ER-2 returns filed in February 2010, and the department had all records, negating suppression or intent to evade, making the invocation of the extended period invalid.
Jharkhand Agricultural Marketing Board Not a Service Provider but Merely Supervisory: CESTAT Quashes Service Tax Demand M/s Jharkhand State Agricultural Marketing Board vs Commr. of Central Excise& Service Tax
CITATION : 2025 TAXSCAN (CESTAT) 833
The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the Jharkhand State Agricultural Marketing Board (JSAMB) was not liable to pay service tax as it was merely a supervisory body and not the service provider in question.
CESTAT Rules Electronic Data Without S. 36B Certification and Statements Without S. 9D Compliance Cannot Be Used for Excise Duty Demand Commissioner of Central Excise& CGST vs M/s Paradise Steels Pvt. Ltd
The New Delhi Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that electronic data without certification under Section 36B and statements recorded without following Section 9D cannot be used to demand duty or impose penalties. The tribunal further observed that the department did not take statements from buyers to confirm the type of goods received, which was critical for proving clandestine removal. The tribunal explained that without following these legal requirements, the department could not rely on the electronic data or the statement of the director to demand duty or impose penalties. The appeals filed by the department were dismissed.
Half-Hearted Investigation by DRI’: CESTAT Remands Genuineness of Manufacturing Activity Matter for Reinvestigation M/s.Welcord Component Industriesvs The Commissioner of GST & Central Excise
CITATION : 2025 TAXSCAN (CESTAT) 835
The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) remanded a case back to the adjudicating authority, holding that the investigation conducted by the Directorate of Revenue Intelligence (DRI) into the genuineness of the appellant’s manufacturing activity was incomplete and lacked proper verification. The tribunal set aside the order and remanded the matter to the adjudicating authority with directions to conduct a thorough examination of the evidence, including inquiries with Godrej, and to pass a fresh order within 90 days. The appeal was disposed of with liberty to both parties to present all relevant materials.
Cenvat Credit on Sales Commission to Agents Admissible: CESTAT M/s. Tamilnadu Petroproducts Ltdvs Commissioner of GST & Central Excise
CITATION : 2025 TAXSCAN (CESTAT) 834
The CESTAT Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that Cenvat credit on sales commission paid to agents is admissible. The tribunal explained that the Gujarat High Court’s Cadila Healthcare decision was based on facts where the commission agents did not engage in sales promotion, unlike in the present case, where evidence of sales promotion by agents was available. It also held that since the appellant disclosed the credit availed in statutory returns and there was no evidence of suppression or intent to evade duty, the extended period invocation and penalty under Section 11AC were not sustainable.
Setback to LG Electronics: CESTAT rules CENVAT Credit on Brand Shop Management Services Not Admissible as Advertising Services M/s LG Electronics India Pvt.Ltd vs Commissioner of Central Excise
CITATION : 2025 TAXSCAN (CESTAT) 836
The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that CENVAT credit on services used for brand shop management by LG Electronics India Pvt. Ltd. is not admissible as advertising services. The revenue counsel argued that the services were actually construction and maintenance activities, not advertising. They observed that the work was carried out at locations beyond the factory gate, such as dealer showrooms, and had no connection with the manufacturing process.
CENVAT Credit on Technical Know-How Services Not Eligible for Trading Use: CESTAT on LG Electronics Case M/s LG Electronics India Pvt.Ltd vs Commissioner of Central Excise
CITATION : 2025 TAXSCAN (CESTAT) 836
The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that CENVAT credit on technical know-how services received by LG Electronics India Pvt. Ltd. is not allowed to the extent it was used for trading purposes. The appellant’s counsel argued that the technical know-how services were essential for business operations, including production, quality control, and marketing, and that the credit had been taken in good faith. It was also argued that part of the credit had already been reversed voluntarily along with interest.